Asia Vital Components Co. Ltd.: 1Q Operating Profit – 3% Beat; 2026 Growth Outlook Intact

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Asia Vital Components Co. Ltd.: 1Q Operating Profit – 3% Beat; 2026 Growth Outlook Intact

IdeaM

RiskRisk RewardReward– Asia Vital- AsiaComponentsVital Co.ComponentsLtd. (3017.TW) Co. Ltd. (3017.TW)

Complete product offering to capture AI trend

PRICE TARGET NT$3,333.00 OVERWEIGHT THESIS

Base case, derived from our multi-stage residual income (RI) valuation model, similar to the ▪We expect AVC to benefit from AI server

rest of our tech hardware coverage universe. We assume a cost of equity of 10%, a medium- and liquid cooling upgrades in view of

term growth rate of 13%, and a terminal growth rate of 3%. the increasing content value of thermal

modules. NT$3,183.00 ▪We view market concerns about orderConsensus Price Target Distribution NT$2,150.00 NT$3,610.00 change impact as overdone and see profit MS PT

growth potential from its leadershipSource: Refinitiv, Morgan Stanley Research Mean Morgan Stanley Estimates

position in server thermal components

(2.5D/3D VC and cold plate modules).

▪Our price target implies that 2026e P/E

RISK REWARD CHART expands to 35x, vs. its one-year average of

21x.Implied 20o27e P/E, however, is 23x.

NT$4,662.00NT$4,662.00(+82.47%)NT$4,662.00(+82.47%)(+82.47%) ▪The stock has outperformed this year. TWD

Even so, we expect positive developments –

including rising adoption of liquid cooling

4000 and design upgrades in AI GPU/ASIC server

racks through 2026–27 – to continue

NT$3,333.00NT$3,333.00(+30.45%)NT$3,333.00(+30.45%)(+30.45%) supporting share price momentum.

NT$2,555.00NT$2,555.00NT$2,555.00 Consensus Rating Distribution

2000 100%Overweight

NT$2,004.00NT$2,004.00(-21.57%)NT$2,004.00(-21.57%)(-21.57%) 0% Equal-weight

1000 0% Underweight

MS Rating

Source: Refinitiv, Morgan Stanley Research

MAY '25 NOV '25 MAY '26 MAY '27